Prudential to split into two companies to target Asia

Cornelia Mascio
Marzo 14, 2018

After the merger, shareholders will hold interests in both Prudential and M&G Prudential. Prudential has sold £12bn in annuity assets to reinsurance business Rothesay Life as part of the demerger.

The two businesses will have their own distinct investment prospects, the firm said today, with M&G Prudential lined up to be "an independent, capital-efficient UK & Europe savings and investment provider" and Prudential aiming to be a "a leading worldwide insurance group focused on high-growth opportunities in Asia, the U.S. and Africa". John Foley, the current head of M&G Prudential, will remain in charge of that business.

"'Our strategy is aligned to structural trends: the savings and protection needs of the fast-growing middle class in Asia, the retirement income needs of the baby boomers in the United States and the increasing demand for managed savings solutions among the ageing populations of the United Kingdom and Europe", Wells explained.

Prudential will remain headquartered in London, under current chief executive Mike Wells. "This will enable it to play a greater role in developing the savings and retirement markets in the United Kingdom and Europe through two of the financial sector's most trusted brands, while Prudential plc will be able to focus on the attractive returns and growth potential of its market-leading businesses in Asia and the USA".

Prudential is to demerge its United Kingdom and European business M&G Prudential, resulting in two separately listed companies.

John Foley, Chief Executive of M&G Prudential, said: "The demerger will allow M&G Prudential to play a broader leadership role in the fast-changing savings and investments market within the United Kingdom and Europe". "Both are expected to meet the criteria for inclusion in the FTSE 100 index".

The move is created to help Prudential focus on its lucrative Asian, US and African operations while giving M&G Prudential "more control" over its own business strategy and the way that it allocates capital.

"In Africa, Prudential has established operations in five countries since 2014, with a substantial opportunity to serve the rapidly expanding customer demand for long term financial solutions", Prudential said. This may include the redemption or debt liability management of issued debt, and new debt issuance.

Prudential said the timing of the demerger would depend on several factors, including the completion of the United Kingdom annuity sale, and the prevailing market conditions. The demerger is subject to shareholder and regulatory approval. An update on the demerger, related steps and timing will be provided in due course.

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